China's 'hutong' economics

As China's leaders gather behind closed doors in Beijing's Great Hall of the People, the concerns for residents of the city's hutong neighborhoods of twisted alleyways are similar to the concerns of those in power. - Rob Schmitz/Marketplace

Inside Beijing’s Great Hall of the People this week, the pomp and ceremony of an historic leadership transition means long-winded ambiguous speeches from officials about China’s future path. A stone’s throw away in a quiet neighborhood of twisted alleys known as a hutong, shopkeepers Sun Zongyi and his wife Song Qinping were content to watch the opening ceremony on TV.

“I was deeply moved by President Hu’s speech," said Sun, "When he said ‘no matter how high your position or who you are, if you are corrupt, you will be punished,’ I applauded.”

The 75-year-old couple share their one-room home with four dogs. One half of the room is their tiny shop, the other half is taken up by their bed. The canines scurry underneath it, barking at each other. Their washroom is a public restroom across the alley. It’s a modest lifestyle, but they don’t have any complaints about money. Song says her pension of $30 a month is sufficient. Her daughters and grandchildren help them out, too. Their salaries have been going up for years, she says.

Slower GDP growth in China may worry economists and the markets, but a closer look at China’s economy shows there’s something else going on. Household income in China is steadily rising, and that’s boosting consumption. While this means better salaries for Song’s kids and grandkids in the workplace, it also means more outsiders moving into Beijing to get in on all the new consumer activity, setting up shops next door.

"Business used to be good, but lately more shops have been popping up all over the place and I can’t keep up," says Song. She says she’s lucky now if she gets more than one customer a day.

And while China’s leaders in the Great Hall of the People talk about corruption among government officials, here in the hutong, they’re dealing with the same issue.

“There’s an old saying: ‘As the forest grows, you get new kinds of birds.’ When Mao ruled China, you could leave your doors open," recalls Song. "Now thieves are everywhere, stealing everything. They’re all migrants from poor parts of China.”

Old Sun interrupts his wife, saying everyone who’s corrupt — officials or migrant thieves — deserve to be shot. Further down the Hutong, migrant Guan Guoxia is staying out of trouble, selling vegetables from her corner store. She came here more than a decade ago from Shandong province, along with her newborn son. He’s grown up here, and he’s ready to attend high school. But he’ll have to return home. He’s not a legal resident of Beijing. It’s like this throughout much of China. Migrants are typically treated like illegal immigrants inside their own country. Many of them aren’t eligible for social benefits like health care and schooling in the cities they move to.

Guan says she hopes China’s leaders will change this system. Otherwise she fears her son will be forced to attend a poor quality school and won’t be able to compete for a good job after he graduates. Competition, she says, is impacting her on all sides. She’s lost business this year to new grocery store chains popping up outside her neighborhood. And as Guan, Song and other small business owners struggle with the realities of market-based capitalism on the street, China’s leaders gather behind closed doors to discuss giving more access to private companies in economic sectors dominated by the state: the Aviation industry, Telecom, you name it.

Economists agree if these changes aren’t made, China’s economy will falter. But more competition can be scary. Even for those inside the Great Hall of the People.

Rob has won several awards for his reporting on China, including two national Edward R. Murrow awards and an Education Writers Association award. His work was also a finalist for the 2012 Investigative...